If I know there will be cashflow, why is it hard to get financing when starting a R.E. business?

In Buying Property - Asked by Jeff P. - Jul 1, 2011
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Answer(s)

Appreciable A.
Corporate Investor
Virginia Beach, VA

I feel your pain Jeff. When we started our company no one wanted to lend money on what we believed were the best deals, (realty that already has tenants in place). What i learned was real estate is really a bunch of subjective qualities that are aligned or not. Equity is subjective, market value is subjective, especially after repair market value. Tenants seems tangible but they aren't assets either. So lenders like to diminish optimistic numbers to play "safe". I have a funding program that you may be interested in. It is usually reserved for small films and movies but I can help you qualify. Email me at app.assets@gmail.com. Chandler

Jul 2, 2011
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Eric V.
Broker/Agent
Corona Del Mar, CA

banks will underwrite using credit cashflow. meaning the cashflow is historical and performing. When you start a business, your numbers are theoretical. You may know there will be cashflow, however, you cannot guarantee it. Actually you can guarantee it, with a savings account tied the bank to repay back the money you borrowed within a time frame - so for borrowers starting a business, a bank will require a reserve account and base it off the amount you have, your credit score, and other variables to gauge your creditworthiness. What you believe, is not what is objectively and guaranteed to be obtained for the bank's risk.

Jul 28, 2011
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